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Paying off Auto Loan before closing?

We close on out new home in Early-May. I currently owe $4,000 on my Auto Loan. I'd like to trade in my vehicle for a Prius. It's an even trade, but in order to make the deal, I need to pay off my Auto Loan. Will this impact our closing? It's not starting a new loan, but instead paying off the balance so we can do an even trade. by jeepercreeper931 from Havana, Florida. Apr 12th 2017 Reply


Anthony Jones (tony4mortgage@msn.com)
#155 ranked lender in Illinois - 1 contribution

I would not acquire any new debt without full disclosure to the lender you are using even if its a even trade this could muddy the water before closing but not a deal killer unless you debt to income ratio increases

Apr 12th 2017
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,446 contributions

Maybe. Contact your loan officer before doing this. It may or may not have any effect for your personal situation, but the big gigantic rule of thumb is to NEVER EVER take out any new debt, or change your financial picture in any way shape, or form while in the loan process. Once your loan closes, do whatever you want.

Apr 13th 2017
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

You need to call your loan officer and discuss this with them.. Typically, if you are paying off debt, then no.. it's usually not a problem.. but if the lender sees a large ($4000) withdrawal on your bank statement, they are going to ask about it and require you write a letter of explanation to be sure you did not take on any new debt.. I'm a preferred Lender with Arizona and California being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Apr 13th 2017
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Carlos Eliseo (carlos_186_486)
#148 ranked lender in Florida - 16 contributions

Make sure that your monthly payment for the new car will not be higher and notify your loan officer prior to making that decision.

Apr 14th 2017
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